sdi-headshot.jpgSDI Group Plc is a leading international specialist in the provision of integrated materials handling solutions for retail, wholesale, fulfilment and e-commerce distribution operations. SDI was started in the UK by CEO Gordon Smith in 1996, with support from SDI in the US, and the Group was listed in 2007 on AIM, the London Stock Exchange’s international market for smaller growing companies. With its Group HQ in Cambridgeshire, the SDI success story certainly shatters the myth that Britain isn’t a world centre of excellence for quality materials handling automation.

SDI’s latest news is that it has just acquired four companies from P.E.P, one of Germany’s leading materials handling solutions providers, giving it access to PEP’s market leading range of products and its customers in Germany, Denmark, Belgium and France. Following the PEP deal, SDI has major plans for expanding its existing overseas operations, which include the USA, as well as broadening its customer base here beyond the fashion retailers it originally concentrated on and developing its business in other sectors. These include the 3PLs and manufacturers, who are now looking to add value to their business through automation.

SDI as a company is committed to helping customers across the sectors, both in the UK and overseas, to use automated materials handling solutions to transform their businesses and steer their way through the economic downturn. SDI’s CEO, Gordon Smith, spoke to Warehouse & Logistics News.

WLN – First of all, Gordon, can you sum up exactly what SDI Group does?
Our Group’s collective experience and expertise encompasses the full spectrum of distribution centre operation and infrastructure – from consultation, design and build to installation, maintenance and support. In simple terms, as a global systems integrator, we design solutions that improve productivity and retail sales margin while supporting sales growth.

sdi-1.jpgThe solutions are sometimes installed in completely new buildings, or alternatively projects can be automated improvements to existing operations designed to reduce distribution costs and support the customers’ expectations of future growth. These solutions are essential for high street retailers to be able to maintain margins through reduction of distribution costs, at a time when retail globally has been experiencing immense competition on both value and choice.

We also manufacture some specialised pieces of hardware and provide training on operating the systems, and also have our own teams who programme and maintain the software to run the systems.

WLN – Your UK company used to be called SDI Greenstone. Why did you change your name to SDI Group UK?
After our successful launch onto the AIM market of the London Stock Exchange in July 2007, we took the decision to standardise the branding across all our operating companies within the UK and Europe. It was a logical next step for us as a business. By standardising our branding across the UK and Europe we can ensure that we maximise opportunities moving forward in both the local and global markets.

WLN – You started SDI Greenstone in your garage, in 1996. How would someone like you were back then fit into SDI Group as it is today?
As a business we still encourage entrepreneurship and innovation within the team, through incentive programmes and personal freedom. It was these attributes that enabled me to set up and grow the business in the early days, and as they continue to be a major factor in our ongoing success I still fit in okay.

WLN – As the CEO, what is your role in the business day to day?
My role is to create an environment where the business can grow and where we maintain high levels of customer service. I also need to keep our external investors up to date, and to do this well I believe I need to remain pretty hands on with the business. I like to stay close to our customers and their operations – it is what I enjoy and always have.

WLN – Is fashion retail still your core business?
We have over 30 years’ experience of operating within the fashion retail sector and are well aware of the issues it faces, such as increased competition, margin reduction, consolidation and new channels to market. We are now successfully applying this wealth of knowledge to new sectors and working closely with leading players in the wholesale, manufacturing, fulfilment and e-commerce arenas.

WLN – Who are some of your clients?
Our solutions are designed to be future proof and to help businesses create competitive edge through innovation and increased efficiency so they appeal to many sectors. Whilst the majority of our clients are in fashion retail others, such as Bertram Books, Borders Books, Easons, WHSmith, FNAC and HMV in the fields of publishing and CD retail and Magna in the Automotive sector, have benefited from our unique consultancy approach, which has delivered innovative solutions that have brought real business benefits Including optimised workforce and increased operational efficiency.

sdi-2.jpgWLN – What other businesses does SDI have in Europe and beyond?
We have operations in the UK, US, France, Germany, Italy, Spain, the Netherlands, Poland, Australasia and Chile. This ensures that our customers can benefit from the strength and expertise of the Group whilst benefiting from local market knowledge and support. We are committed to continuing to invest further within these local markets to grow our business.

WLN – What prompted your recent decision to acquire four companies from P.E.P. Beteiligungsgesellschaft mbH (“PEP) in Germany?
The acquisitions follow our stated strategy of geographical expansion, initially into Germany, India and Brazil. They also reflect the importance of the German domestic market and will allow us to effectively compete as a full service integrator in a market approximately the size of the UK. It gives us instant exposure to a fast growing market and provides us with access to PEP’s industry leading range of products, which we will be able to sell to our customers worldwide. It is of enormous strategic importance going forward and will further extend our footprint and presence in the European market.

WLN – How can the 3PLs make greater use of automation to add value to their businesses?
This year we are seeing an increase in the number of 3PLs who are considering automation as an option. Traditionally 3PLs have shied away from this area because, with their average contract lasting 3-5 years, they have not been prepared to make the investment. However when these contracts are coming up for renewal they are finding that they have achieved all the productivity possible with manual systems, and will have to look at automation as a way of getting their contracts renewed.

WLN – Isn’t automation often seen as a risky and expensive option?
In the past some organisations have been nervous about investing in automation, due to a lack of understanding of the benefits it can bring and concerns about payback. However automation in distribution has matured in the past three years, with new concepts, better technology and system integration compatibility, so that, in the majority of cases when benchmarked, automation solutions are more cost beneficial than traditional solutions. That said, the decision to go for an automated option does require some vision, but the companies that are reaping the benefits are those who have taken a measured risk.

sdi-8.jpgAt SDI we are aware of these concerns and consistently deliver each project on time and on budget, which means clients can be rest assured that their ROI is guaranteed. In fact, in recent years there have been some high profile success stories that have resulted in a quiet confidence within the sector. We have delivered solutions for clients such as Matalan, Levi, Nike, TNT, Prada, Monsoon, Asda George, HMV, JC Penny and Borders Books – all of which have brought real business benefits such as optimised workforce and increased operational efficiency, performance, visibility and control. The majority of our customers see a return on investment in less than 2 years.

WLN – How can SDI help companies who are nervous about the economic downturn?
In a tough market, when a product arrives from overseas it needs to be booked in, sorted and shipped out as soon as possible. As well as speed, accuracy is key – delivering the wrong product to the wrong place costs money. In reality, if we are talking about high volumes being handled at speed, then automation is an option that should definitely be explored. It offers an excellent opportunity to increase productivity and can be designed to take into consideration possible future requirements. For example, as part of the project we recently undertook for Moss Bros, we ensured that the conveyor systems can be upgraded to support further automation and sortation if the business requirement arises, making them as future proof as possible.

Another key benefit that automation can bring during a recession is that it helps organisations to sweat their assets by enabling them to stay in their existing warehouse whilst increasing their volumes. Let’s face it, the land bank in the UK isn’t getting any larger, and rental prices are definitely rising. We have recently completed a project for Magna Automotive, which has created an additional 10,000 sq ft of space within their manufacturing facility to support extra production capacity. This meant they didn’t have to move to a larger, adjacent site, absorbing additional rental costs and the added expenditure associated with transferring the manufacturing operation.

The lack of skilled labour in major distribution areas is also a key consideration for companies looking to cut their supply chain costs, as they face having to pay considerably higher wage bills to get the right workers. In addition health and safety is often on the agenda, particularly in our increasingly litigious society. Many of our automated solutions are designed to optimise the workforce, and a recent project we undertook for a leading high street retailer resulted in no increased staffing requirements, despite achieving a 500 per cent increase in volumes and a 60 per cent increase in warehouse capacity.

sdi-7.jpgWLN – What do you see as the biggest external factors that are likely to impact on SDI Group, going forward?
Looking forward I believe that issues related to the scarcity of skilled labour, and the need to reduce the time to market and cut costs are set to advance demand for automated warehouses over the next few years. Organisations that invest wisely in automation will reap the benefits of faster reaction and cycle times, higher picking accuracy, manpower savings, store friendly picking, RFID, tracking, tracing, information transparency and visibility, with a significant reduction in damaged stock.

WLN – Finally, where do you see SDI Group going from here, and what challenges are you looking forward to as CEO?
As a Group we have longstanding relationships with many global retailers. By developing our own international presence, we have been able to leverage these relationships as our customers expand offshore. As retail continues to move into the Eastern Bloc and Asia, we have the opportunity to further develop our global coverage and move into new markets. This model is well proven in France, Spain and Italy, where customers have been able to use SDI’s experience to gain a competitive advantage in their local markets. We will also continue to expand into new market sectors and continue to grow the maintenance side of our business to support customers – we now have over 100 maintenance engineers based throughout the UK alone.

As the economic downturn continues, we will maintain our policy of ensuring that we do not put too much capital into our solutions, so that clients can be reassured of a quick return. We will work hard to ensure they are more than happy with our solutions.

On a personal note I am looking forward to developing the next generation of new managers within the business. There is some fantastic engineering talent in this country that often goes unrecognised, and in my own small way I intend to try and change that.

SDI Group
3 St. Mary’s Court, Main Street, Hardwick,
Cambridgeshire CB23 7QS
Tel: 01954 211338
Fax: 01954 214475
Email: info@sdigroup.com
www.sdigroup.com

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